Workers will need to be grouped into categories by "same work" or "work of equal value"

To comply with the transparency and reporting requirements under the Directive (see below), employers will need to group workers into non-arbitrary categories of "same work" or "work of equal value" using objective, gender-neutral criteria (skills, effort, responsibility and working conditions (without undervaluing relevant soft skills).

Job applicants and workers have specific rights to pay transparency

In relation to recruitment, the Directive requires Member States to implement laws providing for::

• the disclosure to job applicants of initial pay or salary range (or where applicable, the relevant provisions in an applicable collective bargaining agreement);
• a ban on questions on pay history; and
• a requirement to conduct non-discriminatory recruitment processes, including gender-neutral job adverts

For workers, Member States must implement laws which:

• make easily accessible objective, gender-neutral criteria for pay, pay levels, and pay progression. There is the potential for national legislation to exempt employers with fewer than 50 workers from this requirement;
• provide workers with written information on their pay level and average pay levels (by gender) for categories of workers performing "same work/equal value" within two months of a request;
• inform workers annually about their right to request the above information on pay level and average pay levels; and
• ensure workers are not prevented from disclosing their pay for equal pay enforcement purposes, including banning clauses in contracts prohibiting the disclosure of pay information.

Annual or three yearly reporting of gender pay metrics and remedying of gender pay gaps

Employers must report on set metrics as follows:

• Overall, median and mean gender pay gaps.
• Overall, median and mean gender pay gaps for complementary or variable components.
• Proportion of each gender receiving complementary or variable pay.
• Proportion of each gender in each pay quartile.
• Gender pay gaps by "category of workers" split between base and variable pay.

Thresholds and timing for reporting are as follows (although Member States may impose more onerous requirements):

The accuracy of the report must be confirmed by management after consulting with workers' representatives. Employers must also provide the pay gap information to the relevant national authorities and may also publish it on their website.

A joint pay assessment will be required where a gap of at least 5% is found in any category of workers, which cannot be justified by objective, gender-neutral factors and which is not remedied within six months of reporting.

The joint pay assessment must be conducted in conjunction with worker representatives and must follow prescribed content and disclosure rules. It must be made available to workers, their representatives, the monitoring body and potentially the labour inspectorate and equalities bodies.

Click here to see details of what a joint pay assessment must include:

• an analysis of the proportion of female and male employees in each category of workers;
• information on average female and male employees' pay levels and complementary or variable components for each category of workers;
• any differences in average pay levels between female and male employees in each category of workers;
• the reasons for the differences in average pay levels, on the basis of objective gender-neutral criteria, if any, as established jointly by the employees' representatives and the employer;
• the proportion of female and male employees who benefited from any improvement in pay following their return from maternity or paternity leave, parental leave or carers' leave, if any improvement occurred in the relevant category of workers during the period in which the leave was taken;
• measures to address differences in pay if these are not justified on the basis of objective, gender-neutral criteria;
• an evaluation of the effectiveness of measures from previous joint pay assessments.

Communicating and working with worker representatives

Worker representatives play a central role in many of the Directive's obligations including:

• agreeing objective gender neural criteria to enable the assessment of whether workers are in a comparable situation regarding the value of work;
• accessing pay data provided for by the Directive on a worker's behalf, together with additional reasonable clarification and details;
• being consulted on the accuracy of gender pay gap statistics with scope to request additional clarification; and
• being provided with details of a joint pay assessment which may be required to be carried out where a qualifying gender pay gap exists.

"Workers' representatives" are stated to be those "in accordance with national law and/or practice". Explanatory notes explain that a representative "could be trade unions or other workers' representatives" and if there are no worker representatives, "workers should be able to be represented by a representative of their choice".

Compensation and penalties for non-compliance

Member States will need to reflect the Directive's enforcement regime, which provides for unlimited compensation for breaches and for the employer to bear the burden of proof that the transparency duties are met. A minimum limitation of three years must be set.

The Directive also provides for courts and/or authorities to stop any infringement and to take measures to comply with the legal requirements and for Member States to set deterrent fines.

Employers face a multi‑faceted compliance challenge under the Directive. A core hurdle will be in conducting a job evaluation process, underpinned by reliable pay and progression data and consistent hiring processes. Care will be needed in defining objective, defensible criteria for "work of equal value", while managing sensitive communications with worker representatives and employees through the change

Once the Directive provisions are in force, the greatest potential risk for employers is likely to be the prospect of a joint pay assessment being triggered. The six month widow to remedy a difference is extremely limited and closing gaps will be demanding, particularly where collective bargaining structures are entrenched; unions and staff may press for upward adjustments while employers consider balanced mixes of salary freezes and targeted increases. Legal constraints on changing terms (e.g. consent requirements and limits on unilateral salary freezes) further complicate resolving gaps identified. Wider employee relations issues and the potential for individual discrimination claims will all need to be factored in.

Multi-national organisations will need to assess carefully their approach in each jurisdiction to ensure that it meets the minimum domestic laws in place. It will be important to remember that some Member States already have legal obligations in place and these will need to be addressed alongside new laws implementing the Directive to avoid an inadvertent breach.

International employers may wish to consider a harmonised approach across Member States, but one which meets the minimum legal thresholds in each jurisdiction.

The Directive is required to be implemented into national laws by 7 June 2026. The Directive's transparency duties for job applicants and workers should take effect straight away. Subject to an earlier deadline imposed by national laws, the first gender pay reporting for 150 plus and 250 plus employers will be on 7 June 2027 (see above).

Keeping track of how implementation is being progressed across jurisdictions will be critical to effective preparation; however, many Members States are only now just now starting to progress legislation, together with supporting tools/guidance implementing the Directive requirements.

Despite this inherent uncertainty, employers must ensure they start preparing now.

Immediate actions include the following:

• Look at job structures and identify appropriate analytical tools and methodologies to support equal value assessments, including identifying and documenting gender-neutral criteria. Consideration should also be given to the impact of relevant collective bargaining agreements (at national, sector or company level) as appropriate. Roles should be matched to categories and worker representatives should be engaged where required.
• Draw up and identify a strategy for communicating transparent pay structures – salary ranges and progression rules.
• Scope and audit pay data; confirm what aspects fall within the legal provisions and which workers are in scope. A dry-run pay gap analysis (including by equal-value category) should be considered – bearing in mind local data protection and disclosure rules - and any remedial action that may be required.

Click here to see details of more actions.

Other actions include the following:

• Update recruitment policies to reflect the ban on questions around pay history.
• Put in place processes for managing employee information requests.
• Identify training for staff members conducting equal value assessments and compliance with the Directive's transparency and reporting obligations, including privacy access and controls.
• Develop a strategy for communicating and working with staff representative bodies in line with the Directive's requirements and employee relations issues more generally.
• Keep track of the tools and guidance being developed in each jurisdiction. For example, in Belgium, employer federations are developing compliance tools, with sector-specific and possible online guidance expected, while in the Netherlands, the Ministry of Social Affairs and Employment, in collaboration with social partners, will produce methods and tools to establish pay structures and support reporting ahead of the new law’s entry into force.

International organisations may also wish to look at practical steps already being taken where gender pay gap reporting obligations already exist, such as in the United Kingdom and Italy. While the specific UK legal requirements are different to those of the Directive, the approach adopted to collecting data, making requests, and communicating with employees will be helpful for employers looking to make gender pay gap reports under the Directive for the first time.

(To date the Directive has not been implemented in any of the listed jurisdictions.)